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EM stocks up 0.4%, FX down 0.17%

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Czech central bank rate decision due at 1230 GMT

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Russia to raise VAT to fund military expenditure

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Indian rupee flat near record lows

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Trump to support Argentina, World Bank to accelerate

support

By Nikhil Sharma

Sept 24 (Reuters) - A gauge of emerging market stocks

hit a four-year high on Wednesday, while the Czech crown slipped

as investors awaited an interest rate decision by the central

bank amid speculation of a hawkish monetary policy outlook.

MSCI's index tracking emerging market equities

rose 0.38%, reaching its highest since July 2021. A parallel

gauge for currencies dipped 0.17%.

The Czech crown and Prague equities edged

down as investors turned cautious ahead of the Czech National

Bank's policy decision, with economists expecting a "hold"

verdict.

Inflation that still lingers above the central bank's target

and hotter real wages growth have boosted speculation that the

central bank may signal a prolonged hold in policy.

"The Czech koruna has performed really well so far this

year. The risk is that we see institutional investors already

positioned quite heavily in the currency, especially since there

are still some inflows into the currency," said Tim Graf, head

of EMEA macro strategy at State Street.

Local markets are also positioned for volatility as the

country's parliamentary elections approach, with opinion polls

favouring the opposition ANO party of former Prime Minister

Andrej Babis. Voting will take place on October 3 and 4.

In Hungary, the forint fell 0.4%. The main equity

index declined 0.64% following the central bank's

decision on Tuesday to leave its base rate unchanged at the

European Union's joint-highest level of 6.5%.

The widely-expected move was accompanied by guidance on

maintaining tight monetary conditions to curb inflation, which

is projected to be higher in the 2026 election year.

Polish stocks dropped 1.2% - set for their sixth

loss in the last seven trading sessions. The zloty was

down 0.27%.

Elsewhere, the Russian rouble weakened 0.1% as the

government was set to submit its draft budget to parliament on

September 29. The key market event could see potential tax hikes

as Russia struggles to make financial ends meet in the fourth

year of the war in Ukraine.

The finance ministry said it planned to raise the rate of

value-added tax to 22% from 20% from 2026 to fund military

expenditure.

In an abrupt change in tone, U.S. President Donald Trump

shifted his stance on Ukraine, expressing confidence that Kyiv

could retake all territory occupied by Russia, citing Russia's

"big" economic problems.

Ukraine's international bonds were steady.

In South Asia, the Indian rupee was flat amid

likely intervention by the central bank after a steep rise in

fees for U.S. H-1B visas dragged the currency to record lows.

"Given the current situation, one should expect the Indian

rupee to weaken, though the pace of weakening may slow over

time," Prateek Agarwal, MD and CEO, Motilal Oswal AMC, told

Reuters Trading India forum.

In Latin America, heightened volatility in Argentine markets

put the economy in the spotlight. On Tuesday, the country's

international bonds and the peso extended gains after Trump

voiced support for his Argentine counterpart, Javier Milei.

Additionally, the World Bank pledged to deploy $4 billion in

the coming months to back the South American nation's reform

agenda.

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